Publicprivate Partnerships In The New Eu Member States: Managing Fiscal Risks (114) (World Bank Working Papers),New

Publicprivate Partnerships In The New Eu Member States: Managing Fiscal Risks (114) (World Bank Working Papers),New

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Publicprivate partnerships (PPPs) are popular around the world, in part because they allow governments to secure muchneeded investment in public services without immediately having to raise taxes or borrow. Yet, PPPs pose a fiscal danger because a government's desire to avoid reporting immediate liabilities may blind it to future fiscal cost and risks. Although PPPs may not blemish governments' reported fiscal statements in the short term, they do create fiscal obligations. This increases fiscal vulnerability and can result in poorlydesigned PPPs. The extent of the danger depends on the fiscal institutions that shape and constrain government decisions toward PPPs. Such fiscal institutions affect decisionmaking incentives. Better fiscal institutions therefore can increase the change that PPPs will be well designed and appropriately used.

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